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If you get an address, and have payments sent to you, how are people able to determine how much money you have? What steps do they do to figure this out?

2

Bitcoin's ledger system is publicly visible, but these are pseudonymous payments thus the level of privacy you wish to maintain is up to you.

A charitable organization, for instance, may want the transparency that using a static Bitcoin address provides (this is a concept affiliated with triple-entry accounting).

But an individual might not. Therefore, the default manner that bitcoin operates is to provide a obtain Bitcoin address for each transaction.

Also, if an individual is using a hosted (shared) EWallet, the Bitcoin address is simply used solely by the EWallet provider to know how much to credit an EWallet account -- so the balance shown by the blockchain has no relevance with the balance that shows for the user's EWallet account.

There are methods to try to make conclusions from looking at the flow of funds, but that is an imprecise tactic. It might yield some info though and efforts are underway to share this information.

2

They don't.

You can have as many addresses as you like, and there is little anyone can do to track them all to you.

This means that usually people can know how much money a single address has, but that's pointless, since you can have multiple addresses.

  • 1
    "can know how much money a single address has, but that's pointless, since you can have multiple addresses." And since multiple people can share addresses (happens with wallet services). – Thilo Oct 30 '12 at 5:16

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